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The basket many people are holding all their eggs in, is the USD. That has depreciated significantly in the last few years, with a very good chance that it'll c

The basket many people are holding all their eggs in, is the USD. That has depreciated significantly in the last few years, with a very good chance that it'll continue to do so. My home currency isn't the dollar but my app is priced in dollars and that sucks. I'd far prefer to have Euro earnings and earn a few bitcoins a month as a speculative investment.

tectonic 15y ago
Does investing in foreign stocks hedge against this?
- hugh3 15y ago
  Investing in any stocks hedges against this. For instance, I have shares in General Electric. That means I indirectly own part of all GE's assets. Some of their assets are in US dollars, but the vast majority of their assets are tangible things -- factories that make jet engines and diesel locomotives and dishwashers and... whatever the hell else we make. If the US dollar drops in value, the US dollar value of these real assets goes up correspondingly.
  - nradov 15y ago
    That's only true for some stocks, and GE is a bad example. The majority of GE's assets are not tangible things but rather debt owed to GE Capital. As of 2010 only 9% of GE's assets were tangible property, plants, and equipment. http://www.ge.com/investors/financial_reporting/index.html http://www.ge.com/investors/financial_reporting/index.html
  - orijing 15y ago
    In fact, Warren Buffett said this in an interview: Owning talent is the only way to hedge against depreciation of your currency (equivalently inflation).
- j123 15y ago
  Holding stocks can definitely hedge against a devaluation of currency. Even domestic stocks or others prices in the currency you're seeking to get out of can work, but are significantly worse at doing so than one priced in a "safer" currency. There are investment firms that specialize in investing in the stock of foreign companies.
hugh3 15y ago
The basket many people are holding all their eggs in, is the USD Not many people, or at least not many people with nontrivial amounts of money, have all their assets in US dollars. Most folks own shares and/or property. As you say, US-dollar cash assets are a poor investment right now since interest rates are lower than inflation. Still, keeping all your money in US dollars (in a big brown bag inside a zoo, perhaps) is a lot less nutty than keeping all your money in bitcoins. Even if nothing else, the US dollar has a history of relatively low volatility over the past couple of hundred years, whereas bitcoins have a history of insanely high volatility and dates back to (uhh, goes and checks) 2009.
- Canada 15y ago
  The US dollar hasn't existed nearly that long in its current form. The current currency regime began in 1971 when Nixon ended the policy of buying back each dollar with 1/35 of an ounce of gold. Major changes to the nature or definition of the US Dollar occurred over the past 200 years: - In 1945 the Bretton Woods agreement made the US Dollar the world's reserve currency - In 1933 private ownership of gold in the US was outlawed. Gold was forcibly confiscated for $20 per ounce. The price was then raised to $35 per ounce. - In 1913 the Federal Reserve System was created - In 1861 fiat "Greenbacks" were issued
nradov 15y ago
That depends on what you mean by "few". Here is a chart of the US Dollar index since 2002. http://futures.tradingcharts.com/chart/US/M?1306686035 http://futures.tradingcharts.com/chart/US/M?1306686035 The major depreciation trend stopped in 2004 and since then has bounced around in a trading range.
rdtsc 15y ago
Would you have preferred your app to be priced in bitcoin instead?
- gcb 15y ago
  I think thats already answeres in his comment. he would prefer most of his apps in Euro and a few in Bitcoin
cma 15y ago
"with a very good chance that it'll continue to do so." That's not what extraordinarily low interest rates in the bond market say.
- richardw 15y ago
  China's been buying a lot of dollars to hold their own currency down. I assume that won't continue forever. When it does stop, the USD will drop & Yuan will rise. Also, Pimco, biggest bond trader in the world, has dumped all their treasuries. I'm with them :) My guess is that the USD is seen as a safe haven during these risky times, but not a long-term store of wealth. That's why treasuries are (temporarily) high.

tectonic 15y ago

Does investing in foreign stocks hedge against this?

hugh3 15y ago
Investing in any stocks hedges against this. For instance, I have shares in General Electric. That means I indirectly own part of all GE's assets. Some of their assets are in US dollars, but the vast majority of their assets are tangible things -- factories that make jet engines and diesel locomotives and dishwashers and... whatever the hell else we make. If the US dollar drops in value, the US dollar value of these real assets goes up correspondingly.
- nradov 15y ago
  That's only true for some stocks, and GE is a bad example. The majority of GE's assets are not tangible things but rather debt owed to GE Capital. As of 2010 only 9% of GE's assets were tangible property, plants, and equipment. http://www.ge.com/investors/financial_reporting/index.html http://www.ge.com/investors/financial_reporting/index.html
- orijing 15y ago
  In fact, Warren Buffett said this in an interview: Owning talent is the only way to hedge against depreciation of your currency (equivalently inflation).
j123 15y ago
Holding stocks can definitely hedge against a devaluation of currency. Even domestic stocks or others prices in the currency you're seeking to get out of can work, but are significantly worse at doing so than one priced in a "safer" currency. There are investment firms that specialize in investing in the stock of foreign companies.

hugh3 15y ago

The basket many people are holding all their eggs in, is the USD Not many people, or at least not many people with nontrivial amounts of money, have all their assets in US dollars. Most folks own shares and/or property. As you say, US-dollar cash assets are a poor investment right now since interest rates are lower than inflation. Still, keeping all your money in US dollars (in a big brown bag inside a zoo, perhaps) is a lot less nutty than keeping all your money in bitcoins. Even if nothing else, the US dollar has a history of relatively low volatility over the past couple of hundred years, whereas bitcoins have a history of insanely high volatility and dates back to (uhh, goes and checks) 2009.

Canada 15y ago
The US dollar hasn't existed nearly that long in its current form. The current currency regime began in 1971 when Nixon ended the policy of buying back each dollar with 1/35 of an ounce of gold. Major changes to the nature or definition of the US Dollar occurred over the past 200 years: - In 1945 the Bretton Woods agreement made the US Dollar the world's reserve currency - In 1933 private ownership of gold in the US was outlawed. Gold was forcibly confiscated for $20 per ounce. The price was then raised to $35 per ounce. - In 1913 the Federal Reserve System was created - In 1861 fiat "Greenbacks" were issued

nradov 15y ago

That depends on what you mean by "few". Here is a chart of the US Dollar index since 2002. http://futures.tradingcharts.com/chart/US/M?1306686035 http://futures.tradingcharts.com/chart/US/M?1306686035 The major depreciation trend stopped in 2004 and since then has bounced around in a trading range.

rdtsc 15y ago

Would you have preferred your app to be priced in bitcoin instead?

gcb 15y ago
I think thats already answeres in his comment. he would prefer most of his apps in Euro and a few in Bitcoin

cma 15y ago

"with a very good chance that it'll continue to do so." That's not what extraordinarily low interest rates in the bond market say.

richardw 15y ago
China's been buying a lot of dollars to hold their own currency down. I assume that won't continue forever. When it does stop, the USD will drop & Yuan will rise. Also, Pimco, biggest bond trader in the world, has dumped all their treasuries. I'm with them :) My guess is that the USD is seen as a safe haven during these risky times, but not a long-term store of wealth. That's why treasuries are (temporarily) high.